26-week T-bills auction
The bid-to-cover ratio fell 6.6% from the previous week. It came in at 3.8x for the April 11 auction. In 2015, the bid-to-cover ratio averaged 4.0x. The bid-to-cover ratio shows the overall demand for the auction. The demand for safe-haven T-bills fell as stock markets rallied due to the rise in oil prices.
T-bills don’t pay a coupon. They’re offered at a discount to face value. They’re redeemable at par on maturity. The high discount rate for the April 11 auction fell and came in at 0.35%—lower than 0.39% in the previous week.
Market demand rose
Fundamental market demand rose from 39.4% in the previous week to 43.4% last week. Accepted indirect bids rose to 34.9% week-over-week from 31.9% in the previous week.
Due to the rise in market demand, the share of primary dealer bids fell to 56.6% of the auction from 60.6% in the previous week. Primary dealers are a group of 22 authorized broker-dealers. They’re obligated to bid at US Treasury auctions and take up excess supply. They include firms like Goldman Sachs (GS) and Citigroup (C).